In the second quarter of 2025, Singapore’s retail market experienced a notable increase in occupier demand, as replacement tenants filled vacant spaces left by earlier retail closures, according to a JLL report. This trend, particularly evident in large-format and suburban spaces, contributed to a decrease in the islandwide vacancy rate, according to a report by Jones Lang Lasalle.
The report highlights that the firm demand for retail space, coupled with limited new supply, has led to a marginal decline in vacancy rates across the suburban submarket. This demand is underpinned by Singapore’s status as a regional business hub, which continues to attract capital and support domestic consumption. Despite a subdued retail sales performance due to cautious consumer spending and outbound travel, the tourism market’s ongoing recovery has bolstered occupier demand.
Rent growth across all submarkets continued for the 15th consecutive quarter, although the pace of growth slowed in the secondary and suburban areas. Capital values mirrored this trend, rising for the sixth straight quarter as investors sought stable yields over funding costs. “Firm demand and proactive asset management by landlords drove rent growth quarter-on-quarter,” the report noted.
Looking ahead, the outlook remains cautious. High operational costs and reduced retail spending, driven by a weaker economic and hiring outlook, are expected to challenge business viability, potentially leading to more retail closures and increased vacancy rates. However, the report suggests that rents are likely to remain stable, supporting capital values and maintaining a positive yield spread over funding costs.
“`
